Impacts of child care funding cliff show need for state investment

A version of this column originally appeared in Michigan Advance.

More than seven months after the expiration of $24 billion in federal funds that buoyed our country’s child care sector during the pandemic, newly analyzed Census data has underscored the critical need for stronger state-level investments in child care to support struggling families and providers.

While at least 11 states and the District of Columbia have stepped in to provide significant new state funding for child care in the aftermath of last fall’s funding cliff, Michigan is not counted among them. Families have fared far worse in states like Michigan that have not stepped in to provide this critical support, according to a new analysis by the National Women’s Law Center (NWLC) of Census Household Pulse Survey data.

NWLC’s analysis of the survey data found that the share of responding households with children under the age of 12 that reported a lack of child care over the past four weeks jumped from 17.8% to 23.1% from fall 2023 to spring 2024 in the states without significant, additional investments in child care. 

Here in Michigan, the share of responding households with children under 12 that reported child care arrangement issues over the past four weeks climbed from 19.6% to 22.3% — a 14% increase — in that same time frame. By comparison, there was a smaller, not statistically significant increase in a lack of child care in the states with stronger investments.

Additionally, among the Michigan households reporting child care issues in the spring survey, 36% have cut work hours, 34% have taken unpaid leave, 31% have had to supervise their children while working and 26% have left a job as a result of child care disruptions. Meanwhile, the NWLC’s analysis shows that the share of women respondents who wanted to work, but couldn’t because they were caring for a young child went down in the states providing significant new child care funding, dropping from 45.3% to 31.9%. 

While another child care funding cliff is looming, with more federal funding set to expire in September 2024, and affordable, high-quality child care is still out of reach for far too many Michiganders, there are some exciting opportunities in the state budget proposals for Fiscal Year 2025 that would go a long way in helping to strengthen Michigan’s child care sector. 

These include increased child care subsidy reimbursement rates for providers, provider start-up/stabilization grants and a pilot that would allow child care workers to be automatically eligible for child care subsidies. Budget conversations are ongoing, but these are all promising proposed investments that the Michigan League for Public Policy and our partners support.

We can also ensure more families are able to access affordable, high-quality child care by waiving family contributions for child care subsidies and providing presumptive eligibility for families applying for child care subsidies while their application is pending. Investing in efforts to improve child care workforce recruitment and retention would also help to stabilize Michigan’s child care system, while addressing the low wages that child care workers receive. 

These workers are integral to nurturing, protecting and caring for Michigan’s babies and kids and yet they are among the lowest paid workers in the state, earning a median wage of less than $14 an hour (about $28,870 annually).

This matters for all of us. By one estimate, Michigan is losing out on an estimated $2.88 billion in annual economic activity, including $576 million in direct revenue impact, as a result of inaccessible, unaffordable child care. Making child care more affordable for families and ensuring providers have stable incomes will help parents remain in the workforce, benefiting our state’s economy, while also helping to bring down Michigan’s child poverty rate and provide our earliest learners with access to high-quality care.

In the face of federal inaction, investing additional state dollars in child care is a smart, commonsense choice for Michigan. It would result in better outcomes for families and workers, brighter futures for our state’s kids and a stronger state for everyone.